BEIJING (AP) – Asian stock markets tumble on Wednesday as the US government approaches a potentially devastating default on its debt.

Shanghai, Tokyo and Hong Kong refused.

Wall Street’s underlying S&P 500 plunged 1.1% on Tuesday after House Speaker Kevin McCarthy said, “We’re not on target yet” on the deal. This followed a meeting Monday with President Joe Biden that ended without agreement.

“McCarthy’s comments threw cold water” on sentiment, Vishnu Varatan of Mizuho Bank said in a report. He said the fall in prices is “paying the price for premature optimism about the debt deal.”

The Shanghai Composite lost 0.8% to 3220.44 and the Nikkei 225 in Tokyo fell 0.6% to 30777.29. Hang Seng in Hong Kong shed 1.2% to 19,203.05.

Kospi in Seoul fell less than 0.1% to 2566.68, while the Sydney S&P-ASX 200 lost 0.6% to 7215.40.

Indian Sensex opened up 0.2% to 62,140.23 points. New Zealand and Bangkok have won, while Singapore and Jakarta have declined.

Republicans in Washington are pushing for cuts in aid to the poor and other spending in exchange for agreeing to increase the amount the government can borrow. Biden proposed a combination of cuts and tax increases for the richest Americans, which McCarthy rejected.

Without an agreement, the government would run out of cash to pay the bills around June 1, Treasury Secretary Janet Yellen said. This could cause a shock in the global financial system.

On Wall Street, the S&P 500 fell to 4145.58. The Dow Jones Industrial Average fell 0.7% to 33,055.51, while the Nasdaq composite lost 1.3% to 12,560.25.

Market prices for Treasury debt, which is due around the date of a possible default, fell due to uncertainty about the payment.

The 10-year Treasury yield, or the difference between the market price and the payment at maturity, fell to 3.70% from 3.72% at the end of Monday.

The yield on two-year Treasury bonds increased to 4.34% from 4.32%.

The story goes on

Markets were already worried about the slowdown in global economic growth after raising interest rates in the US, Europe and Asia to curb rising inflation. Three high-profile bank failures in the US and one in Switzerland are also keeping the markets on edge.

Manufacturing and other areas of the US economy are struggling under the weight of higher rates.

In energy markets, US benchmark oil rose 82 cents to $73.73 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 86 cents on Tuesday to $72.91. Brent crude, the benchmark price for international crude, rose 72 cents to $77.56 a barrel in London. It added 85 cents to $76.84 in the previous session.

The dollar fell to 138.26 yen from 138.48 yen on Tuesday. The euro rose to $1.0787 from $1.0776.